New Media for Transit
Agenda
• Background
• Ticketing vs. payment
• NFC
• Google Wallet
• Bank cards
• Open questions
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Nanjing Delhi
Taipei, Taiwan HSR Mexico City Gran Canaria Dubai
Beijing Algiers Oslo Denmark Netherlands Paris Naples Turin Madrid Toronto Shenzhen Strasbourg Lisbon
Thales, 40 years of experience in fare collection systems
Bangkok Cairo
Kuala Lumpur Singapore
Taipei, Taiwan HSR Manila
Hong Kong Mexico City
Caracas
Rio de Janeiro Santiago
Sao Paulo
Gran Canaria Dubai Dominican Rep. Algiers Gautrain Shenzhen Auckland Saudi Arabia NSR
New actors are challenging the Transit industry
Mobility
The mobility technologies hold tremendous potential
How can they help transport authorities to solve the big
issues that underlie any fare management initiative:
Customer convenience
Accessibility
Accessibility
Social inclusion
Operator revenue assurance
Trust
Mobility, why is NFC slow to take off
Rivalry between economic buyers
(Mobile operators and issuers)Ownership of the secure element, roles and responsibilities
Consumers have good enough payment methods
Payments demand simplicity, trust, reliability and low cost NFC requires download, Clicks, selection, PIN codes6
Never achieved a critical mass of users.
NFC Business model is challenged by the number of enabled handsets Handset are chosen by the content and services they enable
Unlikely that mass deployment will come from ability to pay.
Transit
Emulations (Calypso, DESfire) are eventually there. Privacy protection?
For some time in a lot of e-ticketing projects a new magic word is born:
EMV
payment•Presented as the paradigm solution for ticketing
•Answer to all complex ticketing requirements
•Requested by all RFP, even in the US
•Will likely be included in each and every NFC phones
Ticketing and payments
•Will likely be included in each and every NFC phones
Can ticketing be reduced to a simple payment act?
- Diversified offers as answer to clients segments & needs - Simple access to services: choice, buy, use
- Seamless travel with transport means (interoperability) - Customised fares by social clients profiles
- Operational feed back: collect, use data to offer a better service, sell data (?) - Providing real statistics for Operator & Authorities
- Security of the transactions (including payment)
What is provided by Public Transport
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- Security of the transactions (including payment) - Managing peak of transactions & flows
- Loyalty program (Use or Quantity) - Privacy mobility
-Could payment services be able to… and for how much ?
Do P.T. customers need to become bank clients? No bank account = No travel ?
Transport industry move …People
Financial payment industry move ….Money
In the ISO business framework, (ISO24014)
Transport products are: access rights & associated fares (what you sell)
Payment means are not products.They move the money from travellers to transit agencies
Ticketing vs. Payments
They move the money from travellers to transit agencies
Stored value is a transport product.
Loading a transport stored value is paying a product, whatever payment means is chosen by the customer
Debiting a transport stored value is using a product, no “money” moves, no payment.
Registrar Media Issuer Media Manufacturer Transport Operator Application Owner Media Owner Transport Provider Application Media Retailer Security Manager Collect and Forward Central System
Ticketing solutions structured by ISO 24014
SIM, Bank cards Banks MNO 10 Customer Customer Service Product Owner Reloading Agent Float Manager T-purse Owner Product Retailer Contactless Cards Provider Application Retailer• Reload& purchase tickets anytime anywhere
• Avoid queues at reloading terminals
• Obtain Vouchers and cross marketed services on the fly • Remote security features
• Eliminate physical ticket distribution cost and operations
• Dynamic representation in wallet, branding, balance; logo’s
• Cross marketing opportunities, Bundles, ..
• Less –expensive- sales equipment
End user
Transit operator
NFC perspective in transit
• Remote security features • Dematerialize my cards and
present them in my handset wallet
• Add screen, keyboard and connectivity to my cards • NFC tag reading capabilities
• Less –expensive- sales equipment required, take advantage of Station real estate
• Eliminate direct cost of smart media • Enhanced branding opportunities • Link between physical and online
NFC Flavors
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SE in the phone
Google Phone,
SE in the SIM
Any SWP based
phone
SE in the SD
Typhone, ..
Google Wallet
• As MNO and Banks seems not able to find any agreement, Google has launched his strategy. • Google Wallet is linking a payment card (Citi,
Google prepaid card or a gift card) to a phone • It is basically a PayPass (Magstripe profile, US
only) payment application.
• This PayPass application is running in a secure area of the Android based Google phone.
area of the Android based Google phone. • You will need to enable the Google wallet by
typing a pin code, before using it.
• Google claims it does not collect any fees on the transactions but profiles users.
• Offer loyalties and coupons with participating merchants
Why contactless Bank Cards in Transit
Customers
A single card does it all
No need to queue in line to buy fare rights Convenient solution for an occasional journey
Transit Authorities / Operators
No need to issue expensive Limited Use Fare Media to occasional travelers
Card issuance burden transferred to banks
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Card issuance burden transferred to banks Card cost shared between all stakeholders
Banks
Reduced cash handling , displacing cash, seignorage
Acquire new customers (transit co-branded cards cheaper to deploy) New revenue stream with fees
Why Bank cards in transit appears complicated
New actors
(Payment schemes, Banks, ..)with a major influence
For the Transit operators
Fare structure “forced” simplifications.
Fees structure imposed / negotiated from external entities Constraints and liability
PCI DSS, Chargeback, KYC, AML, CFT, ..
Validation speed
Adding strong key players such as Issuing and Acquiring banks
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Adding strong key players such as Issuing and Acquiring banks
For Solution providers
Specifications imposed by external entities.
certifications, architectural changes, external specifications and constraints
Operating processes in line with the payment industry
PCI DSS
What cost will be displaced with bank cards
10 15 20 25 30 35 40 45 41 13 32 8 6Transport for London shows that, today, it costs 14p to collect 1£ of revenue.
100 % = 14p
0 5 Infrastructure & management Revenue protection Product sales
Cust Info & Services
Smart card prod & distribution
How much of this could be eliminated Smart card prod & distribution < 1p (or 1%) With Bank cards, will the fees be below this?
Contactless Bank Cards use cases
“Retail mode” or flat fare
Fare is known upfront at check-in
Used in London TfL Busses for 2012 Olympics, Manchester, NYC, Paris subway trial,…
Mass Transit Extension in the card (SA NDoT card-centric system)
Fare products can be stored in the card.
Transit related “logs” (unsecured variable frame) can be used for fare computation.
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Some fare rules may be difficult to achieve and will likely force simplifications.
Zero amount transaction (account-based system - back office centric)
Fare rules are processed in the back-office, thus any complex rule can be handled. NYC, with Master Card Risk management engine and Citi for US Online cards Will be used in London TfL Metro after the 2012 Olympics for EMV Offline cards All the current US RFP (now requiring EMV compliance)
Card terminal authentication is an EMV off-line authentication based on the
payment scheme security (PKI)
South Africa NDoT Card centric solution
Key Principle
Each transit operator takes ownership of one storage “vault”
He is free to define how to use it, within the NDoT specifications,
Available additional, free access, data storage will be used for fare computation
Bank card use case, Back Office Centric solution
Off line payment (0€) cryptogram
Fare amount computed at End Of Day from transit details
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Issuing bank
•Shadow accounts •Personal accounts
No payments while travelling Float
Acquiring bank
Open questions, ticketing and payment
• Certification or type approval for every device still an issue.
• transit authority quote:
our margin are already thin, why let the banks in?
• The Payment association in the country need to agree on
the “Know Your Customer” and “Anti Money Laundering” constraints
☺
• How to serve the unbanked or underbanked. Prepaid cards.
• In developing countries, the social benefits of financial
inclusion greatly outweigh the issues caused by the usage of prepaid cards.
Open questions, NFC
The handsets are coming
SIM or SD with transit card emulation are there.
Once the ecosystem is built (Handset, Google “mindset”, ..) it will start.
It seems that card contactless payment is a faster payment but NFC contactless
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It seems that card contactless payment is a faster payment but NFC contactless payment will open up coupons, loyalties, offers etc that merchants want to pay for.
by holding your phone against something you are expressing your willingness to interact, effectively saying: “I want this”, whether it
information, a coupon or to purchase an item. This makes NFC technology much more powerful than any other form of mobile-based activity.
Convergence challenges
Global vs. local solutions
Payments are looking for a global solution
Public Transport are always unique and local
Existing infrastructure at PTO’s
Investment needed to update the infrastructure
Transition period
Transition period
Are PTO going to loose control